David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. That said, Jonathan Bragdon, General Partner, Capacity Capital , points out that Flexible VC terms “twin” well with equity: providing less dilution while still providing investor assistance. . of startups raise VC. Of the Inc.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

ithacaVC

SEPTEMBER 4, 2011

Here is the latest edition of Finance Fridays from Brad Feld called “Introducing the Cap Table and CTO” Every startup needs someone to be in charge of the Cap Table. When I was General Counsel at a tech company during the 1999 bubble times, I kept the company’s Cap Table.

Cap Table 49

Cap Table Finance Option Pool Warrant 49

ithacaVC

SEPTEMBER 10, 2012

I recently got a question from a person in a large company who is thinking about joining a startup that expects to raise venture capital. But here is one that I want to focus on in this post: “Can I ask for undiluted stock (non dilution clause)?” It is legally possible to grant non-dilution via a contractual right.

Dilution 53

Dilution Employee Cap Table Equity 53

keen.io

FEBRUARY 5, 2013

How I negotiated my startup compensation. When I started thinking about joining Keen, I quickly realized there is a lot I don’t know about startups. I knew enough to know I wanted to join a startup. To be honest, I knew I wanted to join this startup. Startup Equity for Early Employees. Michelle Wetzler.

Salary 50

Salary Equity Startup Cap Table 50

Both Sides of the Table

JULY 25, 2011

When I first started as a startup CEO in 1999 there were no guides on raising venture capital. Founders don’t often think about “primary&# stock vs, “fully diluted&# stock in terms of voting rights. Or what “flat spots&# on a cap table are. Every startup needs the knowledge in this book.

Liquidation Preference 304

Liquidation Preference Term Sheet Cap Table Participating Preferred 304

Hunter Walker

MARCH 14, 2019

You almost spit out your coffee when she lets you know that she’s leaving for a Tier 1 firm but that her partners John, John Jr or Robert will be great stewards of your startup until she has the pull at her new gig to lead your next round. Below I’m really talking about startups between Seed – Series B.

Cap Table 95

Cap Table Dilution Silicon Valley Portfolio 95

Up and Running

SEPTEMBER 20, 2021

This is all incorporated into a document called a Cap Table. . A cap table will help you in the strategic management of business decisions. Wondering what a cap table is, its importance, and how you can maintain it to expand your business? What is a cap table? Let’s dive in.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Both Sides of the Table

OCTOBER 7, 2014

My speculation is that entrepreneurs had more options and wanted to take less dilution so the old $5 million for 33%-40% of your company no longer made sense and on the VC side it made no sense to pay $20 million pre ($25 million post, which implies the VC gets 20% of the company = 5/25). Startup Lessons' Why the latter?

Cap Table 399

Cap Table Silicon Valley Term Sheet Finance 399

David Teten

AUGUST 19, 2019

Benefits: Non-dilutive, flexible credit offerings that fit SMB or enterprise SaaS. For RBI, return caps of 1.2x-1.8x Limited amount of existing debt and a clean cap table”. Up to $3M in growth capital for your tech startup”. Repayment caps usually range from 1.35x to 2.0x”. Capital need of up to $1.5M

Revenue 60

Revenue Technical Review Software Review Equity 60

The Next Web

OCTOBER 21, 2013

As the European startup ecosystem matures, you would expect young entrepreneurs to enjoy ever-increasing access to useful advice from mentors, business leaders, experienced entrepreneurs, legal advisors and investors. Neil Rimer is a Partner and co-founder of Index Ventures. Alarm bells.

Cap Table 128

Cap Table Option Pool Angel Investor Entrepreneur 128

Gust

OCTOBER 8, 2014

My speculation is that entrepreneurs had more options and wanted to take less dilution so the old $5 million for 33%-40% of your company no longer made sense and on the VC side it made no sense to pay $20 million pre ($25 million post, which implies the VC gets 20% of the company = 5/25). It’s hard building a startup. Why the latter?

Cap Table 136

Cap Table Silicon Valley Term Sheet Non-Compete 136

Haystack

AUGUST 18, 2019

You lose influence as larger investors come into the cap table and start throwing their weight around. Back in 2017, Fred Wilson noted the strategic importance of the seed stage , writing: Seed is really hard. You lose way more than you win. You wait the longest for liquidity. It is where most people start out.

Seed Stage 108

Seed Stage Cap Table Early Stage Malaysia 108

Board Effect

MAY 10, 2019

Capitalization tables—”cap tables” for those who don’t have time for extra syllables—map the balance of power in a company. If org charts are about people power , cap tables are about money power. In reality, however, cap tables are often far more complex. What is a cap table?

Cap Table 40

Cap Table Liquidation Preference Dilution Liquidity Event 40

ithacaVC

FEBRUARY 1, 2018

It is highly typical for a startup to have small investors on its cap table. The treatment of the friends, family and angels (FFA) as the startup matures and raises larger rounds of financing over time is interesting. In this situation, the FFAs are diluted from an ownership percentage, but enhanced economically.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

Both Sides of the Table

FEBRUARY 8, 2016

Much has changed in the past four months of the technology startup world and how outsiders value the business. Optimize for a W more than % dilution in these circumstances. Founders hate them because they’re dilutive. It applies to all startups – not just SaaS. Down rounds are corrosive. Start early.

Burn Rate 150

Burn Rate Cap Table Valuation Balance Sheet 150

Austin Startup

DECEMBER 7, 2017

There are two problems with early stage investing: telling how much a company is worth when truthfully, it is still worthless; and helping early-stage companies protect themselves from over dilution when they are, effectively, worthless. The note converts at a maximum valuation (cap) of $4.5mm. Two sides of the same intractable coin.

Covenant 48

Covenant Cap Table Early Stage SBA 48

Feld Thoughts

AUGUST 28, 2015

I characterized the situation as “silly” and specifically didn’t call out the people as my goal was to be instructive around the startup landscape, not to complain (we are big boys and will deal with whatever) or to try to generate a different outcome. I accepted what happened, wrote my post, and moved on.

Cap Table 70

Cap Table Seed Stage Angel Groups Dilution 70

Hippoland

APRIL 10, 2016

Secondly, even if you are ok with either arrangement you have proposed, it is a major red flag to investors to have much of the cap table locked up with dead-beat co-founders / professors / advisors who are not working day-to-day on the company.

Cofounder 48

Cofounder Cap Table Equity Vesting 48

Bryce Dot VC

FEBRUARY 6, 2017

And not just a token “ramen” level of profitability: The startup is profitable, with January revenue of 10x its burn rate and sales expected to be in the millions for the quarter. Founders can trade the fundraising treadmill for the freedom, control and ownership that comes with managing your cap table closely.

Cap Table 40

Cap Table Burn Rate Dilution Bootstrapping 40

The Next Web

OCTOBER 7, 2013

That’s what a couple of my friends – engineers at Google and Bloomberg who have been following the rise of startup culture with intrigue – told me recently. Cap tables sound intimidating. Startup employees are granted common shares out of something called an option pool. “It kinda sucks to be engineer #1.”.

Engineer 129

Engineer Dilution Option Pool Vesting 129

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 3 Dilution. The re-heating of the venture funded tech market has pushed a heat up of the hiring market, and Im getting more calls from friends asking for help understanding startup stock (equity) offers. From Payne.org Wiki. 2 Stock Classes: Common and Preferred. 4 Vesting. 5 Stock vs Options.

Equity 56

Equity Employee Vesting Preferred Stock 56

ithacaVC

APRIL 5, 2011

I am a huge fan of simple cap tables. A cap table is a written record (in Excel, for example) of who owns stock in your company. It should also provide a combined summary so that it is easy to see who owns what % of the company on a fully diluted and converted basis. I am curious to see how it works out.

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45

Scott Edward Walker

OCTOBER 28, 2014

In this interesting Q&A from Sam Altman ’s Stanford course “ How to Start a Startup ,” Ron and Marc provide some words of wisdom to founders with respect to fundraising, including the following: “[W]hile you’re talking to me in the first minute I’m [asking myself]: ‘Is this person a leader? –Ron Conway (at 1:37). Ron Conway (at 8:50).

Cap Table 67

Cap Table Cofounder Silicon Valley Venture Capital 67

David Teten

AUGUST 21, 2019

Less or no dilution. Lori Smith of White and Williams observes, “The traditional VC is likely going to see these investors in the cap table as a negative. Also see Lighter Capital ’s Cost of Capital Calculator and How to think about different types of funding for your early stage startup. . Optionality.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Hunter Walker

JANUARY 20, 2015

Instead I want to comment on what a “10x Angel” looks like – the type of individual investor who delivers value to the startup in ways that are notably different than the average funder. Or when an exciting A Round may “dilute” them (no, you own less of something much bigger. That’s a good thing.).

Cap Table 48

Cap Table Warrant Syndicate Syndication 48

Hippoland

MAY 16, 2018

(wow, what a concept…) So, now that there are more companies flooding the equity market (via all these blockchain ideas), this means there is increased competition for startups seeking investor-dollars in the traditional equity world. And often, these tranches here and there are done at different valuation caps. And that’s ok!)

Seed Stage 48

Seed Stage Valuation Convertible Security Equity 48

Hippoland

MAY 16, 2018

(wow, what a concept…) So, now that there are more companies flooding the equity market (via all these blockchain ideas), this means there is increased competition for startups seeking investor-dollars in the traditional equity world. And often, these tranches here and there are done at different valuation caps. And that’s ok!)

Seed Stage 48

Seed Stage Valuation Equity Convertible Security 48

This is going to be BIG.

JUNE 2, 2010

Money at a startup is kind of like cash in your wallet—it gets spent. The level of increased complexity in a startup that goes from let’s say two developers and a business or product person just focusing on one thing, to three or four developers and more than one product front to wage war on is significant. Got some dough?

Cap Table 106

Cap Table Seed Stage .Net Venture Capital 106

blog.simeonov.com

FEBRUARY 22, 2010

I have been thinking a lot recently about how to apply agile development principles to investing and key aspects of startup development such as team building. The first post is about agile startup fundraising. The follow-on post is about agile startup team building. of the fully-diluted capitalization of the company.

Founder 44

Founder Vesting Agile Startup 44

www.paulgraham.com

APRIL 28, 2010

Want to start a startup? A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. Few startups get it quite right. 1 ] A startups life will be more complicated, legally, if any of theinvestors arent accredited.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

venturehacks.com

SEPTEMBER 22, 2011

Venture Hacks Good advice for startups. We previously posted a table of market rates for employees. When you evaluate a candidate, ask yourself whether she is likely to increase the next round’s share price (include the dilution of her market rate options). For the average startup, that would be an extraordinary bargain.

Equity 40

Equity Cap Table Valuation RSS 40

Hunter Walker

SEPTEMBER 5, 2021

Startup CEOs Should Test Strength of Cap Table Every ~6 Months To Know Where They Stand. I rather see the difference in dilution be used to continue hiring amazing team members going forward than add a few more basis points to my ownership. Go read it and then come back here…. Long term greedy!!!!

Cap Table 94

Cap Table Seed Stage Syndicate Syndication 94

David Teten

OCTOBER 1, 2015

How would one set up such a startup to eventually raise capital from outside VCs, who will be wary of ‘dead equity’ (i.e., The most important thing to consider is that launching a startup is usually a personal endeavor. First, the founders are their startup and define the company it will become. What are the timelines?

Software Developers 60

Software Developers Software Development Software Review Technical Cofounder 60

VC Cafe

FEBRUARY 9, 2011

In the coming months you will make a multitude of decisions that will define the fate of your new company, and as an experienced startup consultant, I have seen the best and worst of cases. Below I briefly describe my experience with two of my clients, both of which faced the kinds of decisions that make or break a startup.

Technical Review 90

Technical Review Cap Table Due Diligence Non-Compete 90

Both Sides of the Table

FEBRUARY 22, 2011

I understand the appeal of having many VC firms on your cap table. You may feel as I did in 1999 that the more smart people around the table the more intros you’ll have, the more sage advice you’ll receive and the more impressive you’ll seem to outsiders. The Perils of Many. There – the secret is out.

Dilution 314

Dilution Cap Table Due Diligence Option Pool 314

Bryce Dot VC

DECEMBER 22, 2016

For an industry that doesn’t do it for the money, we sure talk about money an awful lot in the world of startups. A few posts were written this past week diving deeper into the numbers that drive VC returns which, in turn, drive behavior in startups who’ve raised money from VCs. Through our work on Indie.vc

Founder 40

Founder Cap Table Dilution Valuation 40

venturehacks.com

OCTOBER 21, 2010

Venture Hacks Good advice for startups. Reading on, the term sheet states, “The $8 million pre-money valuation includes an option pool equal to 20% of the post-financing fully diluted capitalization.&# Update : Check out our $9 cap table which calculates the effect of the option pool shuffle on your effective valuation.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68